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Fresenius Medical's (FMS) Merger Deal to Improve Kidney Care
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Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) recently announced that it has inked a binding deal to build an independent new company that brings together Fresenius Health Partners, which is the value-based care division of Fresenius Medical Care North America, and InterWell Health and Cricket Health. It is worth mentioning that InterWell Health is the leading physician organization involved in boosting innovation in the kidney care space in the United States, while Cricket Health is a U.S. provider of value-based kidney care with a leading patient engagement and data platform.
The completion of the merger is subject to regulatory review. On the basis of the progress of this review, Fresenius Medical currently expects the deal to close in the second half of 2022. The company anticipates that this part of the execution of its growth strategy 2025 will aid it in achieving its financial 2025 targets.
Per management, this announcement is a crucial step in advancing Fresenius Medical’s growth strategy 2025, which aims to extend its presence along the renal care continuum. It further intends to refine and grow its future operating model in Care Delivery in the U.S. as part of the FME25 transformation.
Significance of the Transaction
This new company, which will be fully consolidated by Fresenius Medical as the majority owner, will function under the InterWell Health name and is worth $2.4 billion. The transaction will create an independent entity that extends to the $120 billion chronic kidney disease (CKD) stage 3 to 5 market. This new entity has a goal of engaging and managing the care of above 270,000 people with kidney disease by 2025 and managing approximately $11 billion medical costs in the same year.
Image Source: Zacks Investment Research
The merger combines the strengths of three leading value-based care specialists to build an innovative, stand-alone company that is set to transform kidney care and health equity in the United States. This includes lowering hospital admissions and readmissions and slowing disease progression. Per management at Fresenius Medical, the experience and capability of three leading partners will aid in expanding its offer and add substantial value to patients with CKD throughout the country.
It is important to mention here that executing along the line of strategic expansion in the renal continuum space substantially broadens Fresenius Medical’s total addressable market in the United States from about $50 billion to around $170 billion.
Market Prospects
Per a report by BCC Research, the global CKD market is anticipated to grow from $79 billion in 2018 to $95 billion by 2023 at a CAGR of 3.8% during the forecast period (2018-2023). Hence, this announcement comes at an opportune time for Fresenius Medical.
Recent Development
In February, Fresenius Medical Care North America announced partnerships with above 1,000 nephrology providers in the United States as part of the new Kidney Care Choices (KCC) models. These partnerships involve 20 of the 55 approved Kidney Contracting Entities (KCEs) recently announced by the Centers for Medicare and Medicaid Services (CMS).
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 1.3% on a year-to-date basis, against the industry’s decline of 14.1%.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.8% compares favorably with the industry’s 0.3%.
Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently carries a Zacks Rank #2 (Buy).
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.6% compares favorably with the industry’s 4.1%.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20.6%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 11.8%. MCK’s earnings yield of 8.8% compares favorably with the industry’s 4.1%.
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Fresenius Medical's (FMS) Merger Deal to Improve Kidney Care
Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) recently announced that it has inked a binding deal to build an independent new company that brings together Fresenius Health Partners, which is the value-based care division of Fresenius Medical Care North America, and InterWell Health and Cricket Health. It is worth mentioning that InterWell Health is the leading physician organization involved in boosting innovation in the kidney care space in the United States, while Cricket Health is a U.S. provider of value-based kidney care with a leading patient engagement and data platform.
The completion of the merger is subject to regulatory review. On the basis of the progress of this review, Fresenius Medical currently expects the deal to close in the second half of 2022. The company anticipates that this part of the execution of its growth strategy 2025 will aid it in achieving its financial 2025 targets.
Per management, this announcement is a crucial step in advancing Fresenius Medical’s growth strategy 2025, which aims to extend its presence along the renal care continuum. It further intends to refine and grow its future operating model in Care Delivery in the U.S. as part of the FME25 transformation.
Significance of the Transaction
This new company, which will be fully consolidated by Fresenius Medical as the majority owner, will function under the InterWell Health name and is worth $2.4 billion. The transaction will create an independent entity that extends to the $120 billion chronic kidney disease (CKD) stage 3 to 5 market. This new entity has a goal of engaging and managing the care of above 270,000 people with kidney disease by 2025 and managing approximately $11 billion medical costs in the same year.
Image Source: Zacks Investment Research
The merger combines the strengths of three leading value-based care specialists to build an innovative, stand-alone company that is set to transform kidney care and health equity in the United States. This includes lowering hospital admissions and readmissions and slowing disease progression. Per management at Fresenius Medical, the experience and capability of three leading partners will aid in expanding its offer and add substantial value to patients with CKD throughout the country.
It is important to mention here that executing along the line of strategic expansion in the renal continuum space substantially broadens Fresenius Medical’s total addressable market in the United States from about $50 billion to around $170 billion.
Market Prospects
Per a report by BCC Research, the global CKD market is anticipated to grow from $79 billion in 2018 to $95 billion by 2023 at a CAGR of 3.8% during the forecast period (2018-2023). Hence, this announcement comes at an opportune time for Fresenius Medical.
Recent Development
In February, Fresenius Medical Care North America announced partnerships with above 1,000 nephrology providers in the United States as part of the new Kidney Care Choices (KCC) models. These partnerships involve 20 of the 55 approved Kidney Contracting Entities (KCEs) recently announced by the Centers for Medicare and Medicaid Services (CMS).
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 1.3% on a year-to-date basis, against the industry’s decline of 14.1%.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.8% compares favorably with the industry’s 0.3%.
Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently carries a Zacks Rank #2 (Buy).
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.6% compares favorably with the industry’s 4.1%.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20.6%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 11.8%. MCK’s earnings yield of 8.8% compares favorably with the industry’s 4.1%.